Doubts Over AI Profitability Spread as Oracle Credit Risk Hits Record High

*Editor's Note: 'AI PRISM' (Personalized Report & Insight Summarizing Media) is an "artificial intelligence (AI)-based customized news recommendation and summary service" developed with support from the Korea Press Foundation. It selects and provides six customized news items tailored to each reader type.

1. Growing AI Investment Anxiety: 'Weathervane' Oracle Credit Risk Hits Record High

- Key Summary: Oracle's five-year CDS (credit default swap) premium rose to 2.03 percentage points intraday, marking the highest level since statistics began at the end of 2008. This followed Chinese AI startup Moonshot AI's "Kimi K3" delivering performance approaching that of major U.S. AI models, interpreted as a result of spreading skepticism over the profitability of massive AI capital investments. As a result, spreads on Oracle's existing corporate bonds also widened across the board, and S&P Global Ratings downgraded the company's credit rating earlier this month, citing financial burdens from expanded AI investment. Morgan Stanley noted that while the risk of Oracle immediately becoming a "fallen angel" (a company downgraded from investment-grade to speculative-grade) is not high, distressed debt risk over the medium term depends on AI investment execution and profitability results.

2. Hormuz Risk Reignites: Crude Oil ETFs All Ablaze

- Key Summary: As the armed conflict between the United States and Iran expanded to energy infrastructure such as crude oil facilities and power plants, ETFs betting on oil price gains all topped the returns rankings in both domestic and overseas markets. "KODEX WTI Crude Oil Futures (H)" and "TIGER Crude Oil Futures Enhanced (H)" rose 13.29% and 12.95% respectively from the 14th to the 20th of this month, taking first and second place in domestic ETF returns, while inverse products plunged around 11%, seeing 13 billion won in net outflows. In the U.S. market, the leveraged ETF UCO surged 18.26%, and major crude oil ETFs such as BNO and USO also recorded double-digit gains. Brent crude again surpassed $90 per barrel intraday on the 20th, and Bank of America forecast that oil prices could exceed $100 should the fighting escalate.

3. As Hyundai Motor Stalls, Theme ETFs Slide

- Key Summary: Hyundai Motor theme ETFs listed this year all recorded double-digit negative returns over the past month due to a correction in Hyundai Motor shares and concerns over slowing second-quarter earnings. "ACE K Humanoid Robot Industry TOP2+," focused on future growth potential in robots and humanoids, was the worst performer at -31.22%, while the Hyundai Motor Fixed Physical AI and Hyundai Motor Robotics Value Chain ETFs also posted losses in the 20-30% range. Hyundai Motor closed at 399,000 won that day, breaking below the 400,000 won level for the first time in about six months, and KB Securities lowered its target price from 1.2 million won to 900,000 won. In contrast, mixed-type ETFs that include both Hyundai Motor and bonds had relatively smaller losses, interpreted as showing a volatility-absorbing effect.

4. As Single-Stock Leverage Is Regulated, Retail Investors Rush into '3x ETFs'

- Key Summary: As financial authorities decided to expand deposit regulations on single-stock leveraged ETFs to include overseas products, signs emerged of investors shifting to overseas index-type and sector-type leveraged ETFs excluded from the regulations. On the 16th, the day the regulations were announced, the top net purchase among domestic individual investors' overseas stocks was SOXL (about 745.6 billion won), which tracks the U.S. semiconductor index at 3x, while TQQQ, which tracks the Nasdaq 100 index at 3x, also ranked second in net purchases. Both products ranked low in net purchases before the regulation announcement, but rapidly rose to first and second place after the announcement. The Financial Services Commission (FSC) decided on the 16th to raise the base deposit for domestic and overseas single-stock leveraged ETFs from 10 million won to 30 million won, effective the 5th of next month, with overseas index-type and sector-type leveraged ETFs and individual U.S. stocks excluded from the regulations.

5. Plunging 29% a Day After Hitting Upper Limit: Chong Kun Dang... No, Samchundang Pharm (000250) Draws Investment Warning over 'Suspicious Supply and Demand'

- Key Summary: Samchundang Pharm, which topped the KOSDAQ market capitalization in March this year, plunged 29.79% just a day after hitting its upper limit the previous day, closing at 167,800 won. The previous day's surge was driven by favorable news that the company had received a pre-consultation response document from the U.S. Food and Drug Administration (FDA) to apply for approval of an oral semaglutide generic, but skepticism over the substance spread after the company refused to disclose the original text, citing trade secrets. The Korea Exchange (KRX) designated Samchundang Pharm as an investment caution stock the previous day due to concentrated trading in a small number of accounts, with the participation rate of the top 10 buying accounts reaching 41.50% over the past three days. The share price is down 86.4% from its intraday high of 1,233,000 won at the end of March, approaching its 52-week low.

6. Breaking the Debt-Free Principle Amid the AI Boom: Semiconductor Substrate Makers Bet Boldly

- Key Summary: As the semiconductor substrate industry enjoys a boom driven by AI industry growth, it is accelerating expansion investments, with some mid-sized companies even reconsidering their debt-free principle. Daeduck Electronics disclosed that it will invest 497 billion won by 2027 to expand production facilities for semiconductor packaging substrates, bringing its cumulative investment plan for this year to 710 billion won, and it is also reviewing external borrowing. Simmtech is pursuing an expansion of package substrates for next-generation memory semiconductors with an investment of 40 billion won, while ISU Petasys plans to expand its production of multilayer substrates in the second half of this year to more than 2.5 times that of the first half. According to FnGuide, the combined operating profit of Daeduck Electronics, Simmtech, and ISU Petasys is forecast to surge about 48% from 768.2 billion won this year to 1.135 trillion won next year, while competition to expand substrate production among rival countries such as China, Taiwan, and Japan is also intensifying.